IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Trading when you cannot trade: Blackout periods in Italian firms

  • Barbara, Petracci
Registered author(s):

    This paper is part of the general debate concerning corporate governance. It focuses on a mechanism of self-regulation geared at avoiding market abuses: the use of blackout periods during which insiders are temporarily prohibited from trading on the market. Data concerning corporate characteristics, blackout periods, and internal dealing, seem to indicate that companies with a large number of independent directors and a consistent ability to monitor are more likely to adopt blackout periods. However, the research shows that during 2003 insiders did not comply with Italy's Code of Best Practice; they did not totally refrain from trading during the assigned blackout periods. All three variables measuring frequency trading – the numbers of transactions carried out, of active insiders, and of shares traded – were statistically significant during the specified blackout periods. Therefore, this paper could have practical implications for policy makers. If they decide to adopt self-regulation to fight market abuses, they must be aware that a law is only as effective as its enforcement.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.sciencedirect.com/science/article/pii/S0144818811000378
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by Elsevier in its journal International Review of Law and Economics.

    Volume (Year): 31 (2011)
    Issue (Month): 3 (September)
    Pages: 196-204

    as
    in new window

    Handle: RePEc:eee:irlaec:v:31:y:2011:i:3:p:196-204
    Contact details of provider: Web page: http://www.elsevier.com/locate/irle

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. Faccio, Mara & Lang, Larry H. P., 2002. "The ultimate ownership of Western European corporations," Journal of Financial Economics, Elsevier, vol. 65(3), pages 365-395, September.
    2. Dyck, Alexander & Zingales, Luigi, 2002. "Private Benefits of Control: An International Comparison," CEPR Discussion Papers 3177, C.E.P.R. Discussion Papers.
    3. Rafael La Porta & Florencio Lopez-De-Silanes & Andrei Shleifer, 1999. "Corporate Ownership Around the World," Journal of Finance, American Finance Association, vol. 54(2), pages 471-517, 04.
    4. Darren T. Roulstone, 2003. "The Relation Between Insider-Trading Restrictions and Executive Compensation," Journal of Accounting Research, Wiley Blackwell, vol. 41(3), pages 525-551, 06.
    5. Andrei Shleifer & Robert W. Vishny, 1995. "A Survey of Corporate Governance," Harvard Institute of Economic Research Working Papers 1741, Harvard - Institute of Economic Research.
    6. Klapper, Leora F. & Love, Inessa, 2002. "Corporate governance, investor protection, and performance in emerging markets," Policy Research Working Paper Series 2818, The World Bank.
    7. Doidge, Craig & Karolyi, G. Andrew & Stulz, Rene M., 2004. "Why are foreign firms listed in the U.S. worth more?," Journal of Financial Economics, Elsevier, vol. 71(2), pages 205-238, February.
    8. Nadia Linciano, 2003. "The Effectiveness of Insider Trading Regulation in Italy. Evidence from Stock-Price Run-Ups Around Announcements of Corporate Control Transactions," European Journal of Law and Economics, Springer, vol. 16(2), pages 199-218, September.
    9. Chen, Charles J. P. & Jaggi, Bikki, 2000. "Association between independent non-executive directors, family control and financial disclosures in Hong Kong," Journal of Accounting and Public Policy, Elsevier, vol. 19(4-5), pages 285-310.
    10. Volpin, Paolo F., 2002. "Governance with poor investor protection: evidence from top executive turnover in Italy," Journal of Financial Economics, Elsevier, vol. 64(1), pages 61-90, April.
    11. Emilio Barucci & Jury Falini, 2005. "Determinants of Corporate Governance in the Italian Financial Market," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 34(3), pages 371-405, November.
    12. Paul A. Gompers & Joy L. Ishii & Andrew Metrick, 2001. "Corporate Governance and Equity Prices," NBER Working Papers 8449, National Bureau of Economic Research, Inc.
    13. Core, John E. & Holthausen, Robert W. & Larcker, David F., 1999. "Corporate governance, chief executive officer compensation, and firm performance," Journal of Financial Economics, Elsevier, vol. 51(3), pages 371-406, March.
    14. Jay Dahya & John J. McConnell & Nickolaos G. Travlos, 2002. "The Cadbury Committee, Corporate Performance, and Top Management Turnover," Journal of Finance, American Finance Association, vol. 57(1), pages 461-483, 02.
    15. Barclay, Michael J. & Warner, Jerold B., 1993. "Stealth trading and volatility : Which trades move prices?," Journal of Financial Economics, Elsevier, vol. 34(3), pages 281-305, December.
    16. Eng, L. L. & Mak, Y. T., 2003. "Corporate governance and voluntary disclosure," Journal of Accounting and Public Policy, Elsevier, vol. 22(4), pages 325-345.
    17. Wisniewski, Tomasz P. & Bohl, Martin T., 2005. "The Information Content of Registered Insider Trading Under Lax Law Enforcement," International Review of Law and Economics, Elsevier, vol. 25(2), pages 169-185, June.
    18. Ali, Ashiq & Chen, Tai-Yuan & Radhakrishnan, Suresh, 2007. "Corporate disclosures by family firms," Journal of Accounting and Economics, Elsevier, vol. 44(1-2), pages 238-286, September.
    19. Andrea Melis, 2000. "Corporate Governance in Italy," Corporate Governance: An International Review, Wiley Blackwell, vol. 8(4), pages 347-355, October.
    20. Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, . "Law and Finance," Working Paper 19451, Harvard University OpenScholar.
    21. Stuart Turley & Mahbub Zaman, 2004. "The Corporate Governance Effects of Audit Committees," Journal of Management and Governance, Springer, vol. 8(3), pages 305-332, 06.
    22. Posner, Richard A. & Rasmusen, Eric B., 1999. "Creating and enforcing norms, with special reference to sanctions1," International Review of Law and Economics, Elsevier, vol. 19(3), pages 369-382, September.
    23. Anita Anand & Frank Milne & Lynnette Purda, 2006. "Voluntary Adoption of Corporate Governance Mechanisms," Working Papers 1112, Queen's University, Department of Economics.
    24. Durnev, Art & Kim, E. Han, 2004. "To Steal or Not to Steal: Firm Attributes, Legal Environment, and Valuation," CEI Working Paper Series 2004-7, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    25. Marco Bigelli & Stefano Mengoli, 2004. "Sub-Optimal Acquisition Decisions under a Majority Shareholder System," Journal of Management and Governance, Springer, vol. 8(4), pages 373-405, October.
    26. Denis, Diane K. & McConnell, John J., 2003. "International Corporate Governance," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 38(01), pages 1-36, March.
    27. Erik Berglöf & Stijn Claessens, 2006. "Enforcement and Good Corporate Governance in Developing Countries and Transition Economies," World Bank Research Observer, World Bank Group, vol. 21(1), pages 123-150.
    28. de Jong, Abe & DeJong, Douglas V. & Mertens, Gerard & Wasley, Charles E., 2005. "The role of self-regulation in corporate governance: evidence and implications from The Netherlands," Journal of Corporate Finance, Elsevier, vol. 11(3), pages 473-503, June.
    29. Emilio Barucci & Carlo Bianchi & Alberto Manconi, 2006. "Internal dealing regulation and insiders’ trades in the Italian financial market," European Journal of Law and Economics, Springer, vol. 22(2), pages 107-119, September.
    30. Paul Collier & Mahbub Zaman, 2005. "Convergence in European Corporate Governance: the audit committee concept," Corporate Governance: An International Review, Wiley Blackwell, vol. 13(6), pages 753-768, November.
    31. Elisabeth Dedman, 2000. "An Investigation into the Determinants of UK Board Structure Before and After Cadbury," Corporate Governance: An International Review, Wiley Blackwell, vol. 8(2), pages 133-153, 04.
    32. Fama, Eugene F, 1980. "Agency Problems and the Theory of the Firm," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 288-307, April.
    33. Richard Posner & Eric Rasmusen, 1999. "Creating and Enforcing Norms, With Special Reference to Sanctions," Law and Economics 9907004, EconWPA.
    34. Claessens, Stijn & Djankov, Simeon & Lang, Larry H. P., 2000. "The separation of ownership and control in East Asian Corporations," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 81-112.
    35. Bettis, J. C. & Coles, J. L. & Lemmon, M. L., 2000. "Corporate policies restricting trading by insiders," Journal of Financial Economics, Elsevier, vol. 57(2), pages 191-220, August.
    36. Stijn Claessens & Simeon Djankov & Joseph P. H. Fan & Larry H. P. Lang, 2002. "Disentangling the Incentive and Entrenchment Effects of Large Shareholdings," Journal of Finance, American Finance Association, vol. 57(6), pages 2741-2771, December.
    37. Utpal Bhattacharya & Hazem Daouk, 2002. "The World Price of Insider Trading," Journal of Finance, American Finance Association, vol. 57(1), pages 75-108, 02.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:eee:irlaec:v:31:y:2011:i:3:p:196-204. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.